What ails eac customs union and common market the standard. The economic community of west african states, also known as ecowas, is a regional. Definitions in this protocol, unless otherwise specifically stated. Convinced of the need to establish an institutional framework that shall govern relations between the african economic community and the regional economic communities, the harmonization and coordination of policies, measures, programmes and activities of the latter, implementation of the provisions of paragraph 2 a through d of. Also see african monitor and also see african monitor and oxfam international policy paper social development is critical to meet global crisis in africa, 2009. The east african monetary union ministry of east african. On november 30, 20, the heads of state of the east african community signed the monetary union protocol in kampala.
Burundi, kenya, rwanda, south sudan, tanzania, and uganda. After almost two years of negotiations, the five east african community countries appeared to be reaching agreement on how an east african monetary union will be formed and it was expected that a protocol would be approved at the eac heads of state summit at the end of november. Protocol means the protocol on the establishment of the african monetary fund, the statute and annexes to it. A memorandum of understanding for currency convertibility has since been signed, and fiscal, monetary. Toward a monetary union in the east african community. The east african community eac is an intergovernmental organisation composed of six countries in the african great lakes region in eastern africa. Paul kagame, the president of rwanda, is the eacs chairman. Region means the five geographical sections of the african continent north, east, south, west and central. The african monetary union amu is the proposed creation of an economic and monetary union for the countries of the african union, administered by the african central bank. November 2009 and ratification in july 2010 of the common market protocol by all the partner states. Establishment of single currency usually results from achievement of full monetary union.
West african monetary integration and interstates risksharing. The major benefits of a monetary union are the reduction in transaction costs, economies of. Establishing a monetary institute for the region as an. Protocol on the establishment of the east african customs union. Protocol relating to the establishment of the peace and security council of the african union we, the heads of state and government of the member states of the african union. A monetary union can also be defined as two or more countries with a single currency, or different currencies having a fixed mutual exchange rate monitored and controlled by one central bank or several central banks with closely coordinated monetary policies. Protocol on the establishment of the african monetary fund. Further considering the treaty establishing the african economic community, adopted in abuja, nigeria, in june 1991. The leaders of five east african countries signed a protocol on saturday laying the groundwork for a monetary union within 10 years that they expect will expand regional trade.
Use the link below to share a fulltext version of this article with your friends and colleagues. Eac discusses harmonization of fiscal, budgetary frameworks the east african community needs to build its capacity to produce robust statistics as well as create a credible surveillance and enforcement mechanism to underpin its transition to a monetary union, a workshop on harmonizing fiscal and budgetary frameworks today heard in arusha. Price stability is the primary objective of monetary policies in all eac wto members. Establishment of the east african community common market 1. A literature survey on proposed african monetary unions. South sudan and the east african monetary union south sudans accession into the east african community signals a strong commitment to regional integration. In late 20 the east african community eac countries burundi, kenya, rwanda, tanzania, and uganda signed a joint protocol setting out the process and convergence criteria for an. Common market for eastern and southern africa comesa also has a monetary union objective with its own time table to achieve this. Eac peace and security protocol eac customs union protocol eac common market protocol eac monetary union protocol. Ea2564 preamble the member states of the african union. The eamu protocol was signed on 30th november, 20 and set the groundwork for a monetary union within 10 years while allowing the eac partner states to progressively converge their currencies into a single currency in the community. Treaty on the west african economic and monetary union waemu the text of the treaty establishing the west african economic and monetary union waemu is reproduced below.
African region commenced with, among other things, the construction of the kenya uganda railway 1897 1901, the establishment of the customs collection centre 1900, the east african currency board 1905, the postal union 1905, the court of appeal for eastern africa 1909, the customs union 1919, the. Considering the constitutive act of the african union and the treaty establishing the african economic community, as well as the charter of the united nations. The regional indicative strategic development plan implementation framework identified 2016 as the target for this milestone, which follows the establishment of the free trade. The economic community of west african states, also known as ecowas, is a regional political and economic union of fifteen countries located in west africa. The west african economic and monetary union also known by its. African monetary union eamu is one which will have profound effects. Towards a common currency in the east african communityeac. Union common single market economic and monetary union.
West african economic and monetary union west africa network for peace building. The common market is in place, but many exceptions to the tariff free regime still exist. The customs union was formally completed in 2010, and common market protocol was signed in 2009. The customs union protocol is the first pillar under the eac integration. Second round share purchasing means the opportunity to state parties to. However, several regional monetary union projects are planned such as ecowas, comesa, sadc and eac and a common currency for africa is a longterm goal of the african union. Aspects of the incomplete fiscal architecture of the eurozone are reflected in the protocol. The east african monetary union eamu is an important stage in the process of east african community eac regional integration. African monetary zone wamz, east african monetary union eamu, southern african monetary union samu and african monetary union amu. Protocol on the establishment of the east african customs. Such a union would call for the creation of a new unified currency, similar to the euro. Economic community of central african states wikipedia. Zfull political union 6 levels of regional integration the baseline.
Establishment of the east african customs union, the protocol on science, technology and innovation. African economic and monetary union including setting up of african monetary union, a single african central bank and a single african currency. The major benefits of a monetary union are the reduction in transaction costs, economies of international reserves, the elimination of exchange rate risk and regionwide. Since the protocol provides for the east african central bank eacb to be independent of the governments, have 1. This report given in march 1992 explains the steps necessary to form a monetary union in 2000.
African union handbook, which is an invaluable resource for those who work both with and within the african union. Overview of education sector east african community. Corden 1972 distinguishes, in this regard, between pseudoexchange rate unions,and complete exchange rate unions. The policies cover the 19 eurozone states, as well as noneuro european union stat. It is the strategic framework for delivering on africas goal for inclusive and sustainable development and is a concrete manifestation of the panafrican drive for unity, selfdetermination, freedom, progress and collective prosperity pursued under panafricanism and african. Southern african development community monetary union. Despite numerous protocols and signing of technical consensus documents to facilitate the free movement of goods and people across borders, the aus record in stimulating the removal of trade barriers between countries in the union is less than impressive and the value of intra african trade is still abysmally low as a percentage of total trade. The above strands in the literature have not been structured to present a holistic. Hence monetary union can improve the monetary policy for its members if the pressures on the individual central banks are dissimilar. East african community eac close afrika mashariki road p. Comesa is also work ing toward a monetary union by 2025, but progress in the prerequisite macroeconomic conver.
The central african economic and monetary community cemac was created in 1994 and became operational after the treatys ratification in 1999. Under the eac integration timetable, a monetary union was fixed for 2024, offering member states about five years to progressively move towards a single currency. East africa economic outlook 2019 african development bank. Pillars one and two the customs union and the common, single internal market are. African common market and monetary union, and the negotiations towards east african federation all underscore the serious determination of the east african leadership and. The economic and monetary union emu is an umbrella term for the group of policies aimed at converging the economies of member states of the european union at three stages. The east african monetary union eamu protocol was signed on 30 th november 20. East african trade bloc approves monetary union deal reuters. Preconditions for an effective monetary union article pdf available january 2011 with 1,223 reads how we measure reads. Making the most of the common market on the road to a monetary union is being jointly organized by the east african community eac secretariat, the european union eu delegation in tanzania, and the african department of the international monetary fund imf. The protocol will pave the way for the transition to eamu over the course of the next 10 years and the complementary legal, institutional and economic reforms. The highlevel conference on regional integration in the eac. To design a model protocol for the east african monetary union that would. The road to monetary union in east africa share this blog post on 30 november, the heads of state of the partner states of the east african community burundi, kenya, rwanda, tanzania and uganda met in kampala to approve the protocol for the establishment of an east african monetary union.
South sudan, the eac and east african monetary union. Memorandum on the protocol for the establishment of the east african community monetary union introduction the heads of state of the east african community signed a protocol on the establishment of the east african community monetary union on 30th november 20. The east african monetary union is a project with potentially large long term benefits for all. East african community ministry of external affairs. Considerations for south sudan joining the east african. Indeed, in 20, they adopted the east african monetary union protocol eamu protocol, on top of the macroeconomic convergence framework in place since 2007. The ecowas nations assigned a nonaggression protocol in 1990 along with two.
It is thought that a monetary union, with the absence of currency risk, provides a greater incentive for trade. Regional integration and monetary unions in africa how. Several milestones have been realized under the eac pillars. The eac is approaching the highest stage, having ratified the protocol for a monetary union, but igad is farther behind. The five east african community eac countries on november 30th signed a protocol to establish a monetary union, in a first step towards creating a single currency.
Between the eu and the east african community an analysis prepared by the european commissions directorategeneral for trade executive summary on 3 april 2014, heads of state and governments of africa and of the european union eu gathered at the fourth eu africa summit declared. In order to promote the objectives of the community provided for under article 5 of the treaty and in accordance with the provisions of this protocol, the partner states hereby establish a common market as an integral part of the community. Eac endorsed the protocol on the establishment of the east african community monetary union the protocol committing them to full monetary union by 2024. The eamu protocol was adopted in accordance with the eac treaty and signed on 30th november 20. Considering that the constitutive act of the african union established the african monetary fund in its article 19c. Cemac currently operates a customs union and monetary union. Protocol on the establishment of the eac customs union 2005, countries agreed to. Nov 30, 20 the leaders of five east african countries signed a protocol on saturday laying the groundwork for a monetary union within 10 years that they expect will expand regional trade. The east african monetary union protocol 2012 is yet to be signed and the date for eamu actual implementation of the common currency is uncertain. Countries are expected to attain headline inflation of a maximum eight per cent, a fiscal deficit including grants of not more than three per cent of gdp, a public debttogdp ratio of 50 per cent and forex reserves of at least 4. National governments cede sovereignty over economic and social policies to a supranational authority establishing common institutions and. The economic impact of the eu east african community.
Eac monetary union protocol cooperation east african community. The african union strategy for regional integration 25 objectives of the aec as stated in article 4 include, inter alia, the integration of african economies31 and the coordination and harmonization of policies among existing and future economic communities in order. The economic community of west african states ecowas was established in 1975 with the formal aim of promoting economic cooperation between 15 countries with different historic trajectories colonisation. Since 1975, the waemu member states created with seven others west african states cape verde, gambia, ghana, guinea conakry, liberia, nigeria and sierra leone the economic. The objective of the study was to establish the basis of the formation of east africa community common market and also to determine institutional challenges facing the east africa community common market in kenya. Ongoing reform efforts by eac countries aim at establishing a monetary union by 2024. Collectively, these countries comprise an area of 5,114,162 km 2 1,974,589 sq mi, and in 2015 had an estimated population of over 349 million. Agenda 2063 is the blueprint and master plan for transforming africa into the global powerhouse of the future. Designing fiscal institutions for an east african monetary union.
The east african monetary union eamu is the third milestone of the eac integration process. The eac integration process is anchored on four pillars namely customs union, common market, monetary union and political federation. The protocol aims to harmonize monetary and fiscal policies and establish a common central bank for the east african community. Towards a common currency in the eastern african community. Eac achievements ministry of east africa community and. The organisation was founded in 1967, collapsed in 1977, and was revived on 7 july 2000. The west african economic and monetary union, for one, was formed in 1994 and shares the cfa franc among eight west african countries, while namibia, swaziland, and lesotho have been linking their currencies to the south african rand under a common monetary area established in 1986. The protocol on its establishment was signed in november 2009. The euro zone and both of the cfa franc zones would be examples of full monetary union. Currently the intention is to sign the east african monetary union protocol 2012, while the date for actual implementation of the common currency is uncertain. The monetary union eamu protocol is the third pillar of eac integration. Hence, corresponding policy implications from the plethora of studies may also vary depending on contexts. Economic union a common market with unified monetary and fiscal policies, including a common currency.
The eac has a number of established organs that are similar to those of eu, namely the council of ministers, east african. Establishing monetary union in the sadc region is one of the ultimate goals of the sadc protocol on trade and a key milestone in the drive for deeper integration in sadc. Political union the ultimate stage of integration, in which members become one nation. When the east african community eac was revived in 1999, more than million citizens of the region expected it to fully tap into the benefits of a rejuvenated economic and political bloc. A full monetary union involves a single currency and central bank. The eac journey to a monetary union began with the establishment of the east african monetary union in 2015, which provided a roadmap to achieve a single currency region within 10 years by 2024. Monetary unions and common currency areas are not new to africa.
The planned introduction of the east african monetary union bis. On behalf of the african union heads of state and government, it is my pleasure to introduce the 2019 edition of the. The eac member states signed the protocol on the establishment of the east african community monetary. Economic community of west african states wikipedia.
Burundi has joined rwanda and tanzania in ratifying the east african community monetary union protocol. Calibrating the model to evaluate the proposed monetary union in the east african community, it is found that central bank uncertainty would be a significant aspect in the net welfare effect of monetary union. At a summit meeting in december 1981, the leaders of the udeac agreed in principle to form a wider economic community of central african. The east african community eac has failed to meet its 2012 target of agreeing on the formation of a monetary union. The consultations on the monetary union, which commenced in 2009, and fast tracking the process towards east african federation all underscore the serious determination of the east african leadership and citizens to construct a powerful. Feasibility of proposed monetary unions in the eastern and. Protocol on the african monetary fund home african union. Monetary union is the third of the four pillars in the eacs ambition towards regional confederation.